TDCX’s Q4 profit rises 27.8% to S$32 million on higher margins
Michelle Zhu
NEW York-listed digital customer solutions provider TDCX posted a net profit of S$32 million for its fourth quarter ended December 2023, up 27.8 per cent from S$25 million in the prior year, as lower expenses helped to offset the quarter’s topline decline.
Revenue fell 10.1 per cent year on year to S$158.8 million, mainly due to a 36.7 per cent drop in contributions from the content, trust and safety services segment.
On Thursday (Mar 7), the group attributed the segment’s top line decline to a contraction of volumes required by its digital advertising and media vertical client.
Revenue contributions from the omnichannel customer experience solutions dipped 1.9 per cent as well, impacted by lower volumes required by the group’s existing clients in the digital advertising, as well as media and fintech sectors.
In the sales and digital marketing services segment, top line contributions decreased 12.1 per cent amid reduced volumes for existing campaigns by key digital advertising clients, as well as media and e-commerce sectors.
TDCX’s employee benefits expenses notably fell 14.5 per cent to S$98.2 million versus S$114.8 million in Q4 of FY2022.
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This was mainly due to a reversal of equity-settled, share-based payment expenses as the group factored in “more headwinds in the recent business dynamics” that also contributed to lower headcount required for customer campaigns.
Other operating expenses fell 29.9 per cent to S$6.6 million from S$9.5 million previously, due to lower net foreign exchange losses.
Over the period, the group also reported a near-doubling of interest income to S$3.5 million from S$1.4 million a year prior. This is due to higher interest rates in 2023 and higher placements of excess liquid funds in interest-earning deposits.
Other operating income grew to S$1.5 million from S$395,000 in the same period last year, due to a higher fair value gain of financial assets.
Net profit margin for the period stood at 20.1 per cent versus 14.2 per cent in Q4 of FY2022.
Earnings per share (EPS) stood at S$0.22, up from S$0.17 in the same quarter a year prior.
The latest set of results brings TDCX’s net profit for the full-year to S$120.1 million.
This translates to a net profit margin of 18.3 per cent and EPS of S$0.83.
These are all up from earnings of S$104.9 million, a margin of 15.8 per cent, and S$0.72 EPS for FY2022.
The group’s chief executive and founder Laurent Junique said dampened business sentiments amid market uncertainties and a challenging macroeconomic environment had a “knock-on impact” on TDCX this year.
“Despite these pressures, we delivered within our guidance and remain focused on the long term, particularly on improving our operations and delivering client value propositions.”
Junique is in the midst of acquiring and privatising TDCX in a deal that implies an equity value of about US$1.04 billion.
After launching a proposal to take the company private at US$6.60 apiece in January this year, the chief executive and his associates in March entered into a definitive agreement to acquire remaining unowned shares in TDCX through a parent-subsidiary merger.
Also known as a “short-form” merger, the deal is expected to close in the second quarter of 2024.
Junique and his affiliates presently own 86.1 per cent of TDCX’s existing shares, which translates to 98.4 per cent of the aggregate voting power of the company.
In the latest deal, Class A and B shareholders – whose ordinary shares each hold a par value of S$0.001 – would be entitled to US$7.20 in cash apiece for the cancellation of their shares.
Holders of American depositary shares (ADS) are offered the same for the cancellation of their shares, which represent one Class A share per ADS.
Meanwhile, those who hold vested warrants in the company will receive US$7.19 in cash per warrant cancelled.
On Mar 1, TDCX said the consideration represents a premium of 48 per cent to the company’s ADSs on Dec 29, 2023, which is the last trading day prior to the company’s receipt of Junique’s Jan 2 offer.
It also represents a premium of 17 per cent to the closing price of the company’s ADSs on Feb 29 this year, which was the last trading day before the merger agreement took effect.
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